PROJECT INFORMATION DOCUMENT (PID) CONCEPT STAGE Public Disclosure Copy Report No.: PIDC574 Project Name Capturing Coral Reef Ecosystem Services (CCRES) (P123933) Region EAST ASIA AND PACIFIC Country East Asia and Pacific Sector(s) General agriculture, fishing and forestry sector (50%), Agricultural extension and research (50%) Theme(s) Biodiversity (40%), Other environment and natural resources management (40%), Climate change (20%) Lending Instrument Technical Assistance Loan Project ID P123933 GEF Focal Area International waters Borrower(s) The University of Queensland Implementing Agency The University of Queensland, The University of Queensland, The University of Queensland, The University of Queensland Environmental C-Not Required Category Date PID Prepared/ 22-Aug-2012 Updated Date PID Approved/ 12-Jun-2013 Disclosed Public Disclosure Copy Estimated Date of 18-Jun-2013 Appraisal Completion Estimated Date of 25-Jul-2013 Board Approval Concept Review Track I - The review did authorize the preparation to continue Decision I. Introduction and Context Country Context Regional Context The East Asia-Pacific Region has experienced unprecedented economic growth over the last decade. Despite the global economic slowdown, the region still contributes 30% of global GDP growth, with developing countries’ share (excluding China’s) increasing in tandem with the newly industrialized economies. The Indo-Pacific and West-Central Pacific region also supports large coastal populations where half or more of a nation’s population may live within 100 miles of the coast. Of the world’s 27 megacities (with populations of over 10 million), 15 are in East Asia. Twelve of these are coastal. Nearly 1 billion people in the region live in low-lying coastal areas, Page 1 of 10 exposed to sea level rise and the associated impacts of climate change, such as more frequent and intense cyclonic activity, salt water intrusion and coastal erosion. Public Disclosure Copy The Region also supports tremendous marine biodiversity—the world’s biodiversity epicenter is thought to lie within the Coral Triangle (an area extending from the northern Philippines to Malaysia in the west, East Timor to the South, Eastern Indonesia and PNG to the East, and trailing off to the Solomon Islands toward the Southeast). Here coral reefs are most abundant and diverse and support large populations of poor people with a high dependency on coral reef fisheries for livelihoods and food security. In the Western and Central Pacific, healthy coral reefs and mangroves form the first line of defense against storm surge and SLR for low lying islands and atolls. Beyond coastal protection, the rich biodiversity that coral reefs harbor (25% of marine biodiversity is thought to reside in < 0.1% of ocean surface area occupied by coral reefs) also supports world-class dive and beach tourism. There is also evidence that coral reefs in the Pacific may serve as a production function for some tuna stocks, which frequent outer reef areas of atolls in search of prey at the edge of deep water, pelagic environments. Tuna stocks are a major source of wealth in Pacific Island Countries, although this wealth is not necessarily evenly distributed. While poverty reduction gains continue in the region, more than 450 million people in East Asia- Pacific region still live on less than $2/day. A disproportionate number of these poor are fishers, whose livelihood options are limited and who compete for fewer and fewer fish in open access, and coral reef-based fisheries in a race to the bottom. Women represent nearly half the labor force in fisheries-related production in the region. Managing coastal and marine resources sustainably remain major challenges. Indonesia is a global biodiversity hotspot, harboring among the world’s most diverse and extensive rainforest and coral reef ecosystems. But this diversity is under continuous threat. Indonesia’s natural capital, which is estimated to be a quarter of its national wealth, is being rapidly depleted. Coastal/marine degradation is a major environmental issue in Indonesia. To address this concern, Public Disclosure Copy Indonesia has emerged as a leader in the region in the development of REDD+ initiatives, and the Coral Triangle Initiative (CTI), building on a 15-year program of community-based rehabilitation and management of Indonesia’s coral reefs (COREMAP). The third and final phase of the WB/GEF Adjustable Program Loan is now under preparation and will support implementation of the CTI’s twin goals of food security and marine biodiversity conservation, while investing in the creation of alternative livelihoods that depend on healthy coral reefs. In the Philippines, the loss of natural resources, including loss of critical coastal habitats like mangroves (to aquaculture) and coral reefs (to overfishing and destructive fishing), and decline in fisheries productivity due to overfishing, weak governance and dissipation of natural resource rents, is recognized as a constraint to sustained growth and poverty reduction. A major development challenge is to achieve more sustained and inclusive growth. The Government of the Philippines has joined the Bank’s partnership with WAVES (Wealth Accounting and Valuation of Ecosystem Services www.worldbank.org/programs/waves) as one of several pilot countries that will include natural capital accounting, using the new UN System of Economic and Environmental Accounts standard (SEEA) to inform economic, environmental and natural resources management decisions, and will pilot new methods to measure and account for ecosystem services (including coral reefs), which are not currently part of SEEA. The Pacific Islands Ocean Region covers some 40 million square kilometers of the earth’s surface, Page 2 of 10 and is home to a wealth of ocean resources and biological diversity whose use is essential to the economies and development of Pacific Island Countries (PICs). There are enormous challenges confronting the region’s ocean resources and the benefits they provide, including overexploitation Public Disclosure Copy of fisheries, destruction of natural habitats, and pollution. The Bank has been assisting countries in the region to access adaptation funds from the donor community to build resilience to climate change in coupled human and natural ecosystems. In addition to supporting implementation of coastal infrastructure managem ent and Ecosystem-Based Adaptation under the Pacific Islands Pilot Program on Climate Resilience, the Bank has financed the planting of 37,000 mangroves in Kiribati to reduce climate vulnerability. With the launch of the new Global Partnership for Oceans in Rio last June, the Bank is now in the process of identifying an IDA-financed Pacific Islands Regional Ocean Investment Package to help PICs capture more of the benefits that ocean ecosystem services provide. These include highly productive tuna stocks and other marine fisheries, marine tourism based on outstanding biological and cultural assets, and the natural coastal defense that healthy coral reefs and mangroves provide. Beyond their role in absorbing storm surge, coral reefs and sea grass beds also store significant amounts of carbon, stripping CO2 from the atmosphere and sequestering in their living tissue and the extensive underwater root system and organic soil matrix that may reach several meters in depth. This Blue Carbon represents an undervalued asset that exceeds carbon sequestration rates in terrestrial tropical forests. Sectoral and Institutional Context Coral reefs and their associated near-shore ecosystems (e.g., mangroves and seagrass beds), are under severe threat from overexploitation and destructive use. Despite their unequivocal importance to human wellbeing and economic activity, the services provided by these ecosystems are routinely taken for granted by communities, industry and policy makers alike. Natural capital is considered a free good, open to collective exploitation, with deleterious consequences. Capturing the economic and cultural values of marine natural capital through valuation of Ecosystem Services (ES), and quantifying the cost of lost services due to environmental degradation, has the potential to transform the development and stewardship of coastal areas by translating ecological value into intuitive and Public Disclosure Copy financial terms for local stakeholders as well as policy makers. This knowledge can be harnessed by social marketing and decision support tools to help build the political rationale for change. Together with marketable goods and provisioning services, marine and coastal ecosystems also provide a range of non-market goods and services such as regulating global carbon and nitrogen cycles and protecting shorelines. Local and global drivers of change influence each of these services and it is imperative that management and policy be suitably informed to ensure the continued supply of the ES on which human well-being and prosperity depend. The CCRES Project (Capturing Coral Reef and Related Ecosystem Services) would harness biophysical and social sciences to demonstrate the ecological value (production function) of intact coral reef and mangrove ecosystems and introduce innovative ways to capture economic value from the flows of ecosystem services from healthy and resilient systems. This would help lower the barriers to investment in the long term stewardship of these ecosystems to ensure future flows. Making these links to real benefits and their values explicit would help create incentives for payments for ecosystems services and the maintainance of critical elements of biological community structure and function. It would provide a model for integrative marine spatial planning, helping policy makers to synchronously improve productivity and biodiversity conservation in marine reserves, better situate marine protected areas across seascapes, and also facilitate co-development of multiple economic sectors and biodiversity conservation. It would also generate a framework for eco-business development to harvest the values accruing from the Page 3 of 10 ecosystems. CCRES would focus on countries in the Coral Triangle (Indonesia and the Philippines in particular, Public Disclosure Copy and some Western Pacific PICs), where coral reef and related ecosystem services (CRES) are critical to livelihoods and food security, and will play an essential role in improving prospects for a sustainable future, in which vulnerable communities are better equipped to adapt to the inevitable impacts of climate variability and change. Despite their unequivocal importance to human wellbeing and economic activity, the services provided by ecosystems are routinely taken for granted by communities, industry and policy makers alike. Natural resources are not considered in the same light as other economic resources, with deleterious consequences. The economic valuation of ES has excellent potential to transform the development and stewardship of coastal areas, translating ecological value into intuitive terms for local stakeholders as well as policy makers, thereby helping to build the political rationale for change. In conjunction with marketable goods and services such as the provision of food and income associated with the fishing and tourism industries, marine and coastal ecosystems also provide a range of non-market goods and services such as regulating global carbon and nitrogen cycles and protecting shorelines, but research effort has been less intense in these areas. Local and global drivers of change influence each of these services and it is imperative that management and policy can be suitably informed to ensure the continued supply of the ES on which human wellbeing and prosperity rely. Even though the value of marine and coastal ecosystems to human well being is arguably greater than that of terrestrial systems, the level to which marine and coastal ecosystems will be affected by global change is understood to a much lesser degree (Hoegh-Guldberg and Bruno, 2010). Despite heavy exploitation, most marine ecosystems remain fundamentally similar to those of past Public Disclosure Copy millennia, but in a much-degraded form. It is not currently known how marginal changes in ecosystem state or function translate to changes in ES value, and so manage rs and policy makers cannot estimate the impact that a given intervention, positive or negative, will have on the value of services or their distribution to various actors. In order to provide policy makers with a robust basis for making natural resource management decisions in the developing world, key knowledge gaps need to be filled. Component 1 of CCRES aims to engage researchers, natural resource managers and policy makers in advancing our understanding of how dynamics within and among the components of social and ecological systems affect the service value, and conservation value, of key marine and coastal habitats. The research will underpin the ecobusiness models developed by Component 2, and will ensure that the interactions among those ecobusinesses are optimised within a fully participatory framework. Relationship to CAS The CASes of Indonesia and the Philippines focus on poverty reduction through Community Driven Development (CDD), employment opportunities through private sector led growth (small and medium enterprise in rural areas) and equality of growth, and effective natural resources management through better governance. In Indonesia, with Green PNPM (focusing on payment for ecosystem services as the basis for community cash transfers) and COREMAP III under development, the CCRES Project has a unique opportunity to align with, and add value to, these Page 4 of 10 Bank operations. Similar opportunities exist to influence CDD projects in the Philippines, including the Central Philippines Rural Development Project, targeting coastal municipalities vulnerable to climate change and overfishing. In the Pacific, the Bank’s engagement strategy emphasizes Public Disclosure Copy expanding regional partnerships and South-South Learning, introducing innovation through new knowledge products and financing mechanisms, and building resilience to climate change. The CCRES Project is highly consistent with these CAS pillars. II. Proposed Development Objective(s) Proposed Global Environmental Objective(s) (From PCN) The Project Development Objective is to to pilot, share knowledge, and disseminate information on a regional initiative to value marine and coastal ecosystem services for natural wealth accounting, marine spatial planning, alternative livelihood creation, and reef stewardship in coastal communities where coral reef and related ecosystem services are critical to economic development, livelihoods and food security. Key Results (From PCN) Key Performance Indicators will revolve around the following results/outcomes: • A suite of coral reef ecosystem services in 3-4 pilot sites across three countries in the region quantifed using economic and ecological valuation techniques and communicated to target user groups. • Eco-business models based on coral reef ecosystem service values developed and used to inform alternative livelihood business planning in GEF/WB projects in the region. • Uptake of knowledge and information generated by the Project is: (i) influencing policy and management strategies in the targeted countries, and (ii) influencing the design and implementation of GEF/WB operations in the region. III. Preliminary Description Concept Description Public Disclosure Copy A. Project Context Although 30 percent of the world’s coral reefs are now at risk of extinction, there is a shortage of political will and economic incentives to provide for their survival. Placing an economic value on the real (and potential) services these ecosystems provide in terms of livelihoods, nutrition, economic growth, carbon sequestration and climate change adaptation, has the potential to transform coral reef management and build the political rationale for change. This will need to be underpinned by policies, such as property rights, and enforcement of legal frameworks that reinforce behavioral change. By carrying out science-based research in three regions (Indonesia, Philippines, and PICs) the project will showcase new ways of valuing and realizing tangible benefits from coral reef ecosystem services through: (a) quantifying and accounting for the value of this natural capital; (b) feeding this information into marine spatial planning and economic development planning at the local (District/ Municipal) level in demonstration sites in Indonesia, the Philippines, and the Pacific linked to Bank operations; (c) creating business models for harvesting these resources’ rents at the community level to help transform livelihoods and shift behavior away from extractive use toward greater stewardship of reef resources; and (d) promoting uptake of these results into GEF/WB regional projects and, by wider groups of stakeholders through targeted communication and extension Page 5 of 10 means. The project comprises three components: Public Disclosure Copy • Component I will undertake field investigations in selected regions to determine the value of coral reef and mangrove ecosystem services to coastal economies, and develop a framework for valuation, ecosystem use planning, and marine spatial and economic development planning. • Component II will draw on the results of the investigations and economic analysis in Component One and use these to develop a framework to evaluate and generate sustainable eco- business models for marketable ecosystem services. • Component III focuses on the uptake of project research through developing information resources, and its effective dissemination. B. Project Components Component I: Quantifying the value and market potential of coral reef and mangrove ecosystem services (US$1.0 M) Despite their value to human prosperity and well-being, the services provided by ecosystems tend to be taken for granted by communities, industries and policy makers alike. That natural capital resources are not considered in the same light as other economic resources contributes to their ongoing demise and encourages ad hoc decision making that would not be acceptable in the management of other capital resources. Economic valuation and systematic management of ecosystem services (ES) have excellent potential to transform the development and stewardship of coastal areas. Translating ecological value into meaningful terms for local stakeholders as well as policy makers, Component I of CCRES aims to demonstrate how ecosystem services can be Public Disclosure Copy accurately valued and systematically managed to deliver pro-poor, pro-environment outcomes, and to help build the political rationale for change. Previous economic analyses have usually ignored the state or health of an ecosystem and essentially associated activities, such as tourism, with the existence of an ecosystem (implicitly assuming that it is either present or absent). However, the real challenge facing people in tropical coastal areas is one of ecosystem decline; most ecosystems will not ‘disappear’. Thus, economic analyses are needed that measure the marginal change in value as a function of ecosystem health. Valuing systems in this way is a substantial scientific challenge but CCRES integrates the necessary disciplinary backgrounds within the natural sciences, social sciences and economics. Working at a number of pilot and demonstration sites in the Asia-Pacific region, Component I will first quantify the value of key coral and mangrove ecosystem services as a function of system state. Services include reef fisheries, ornamental species (aquarium trade), island stability, prestige diving tourism, blue carbon, and cultural benefits. By making the links between ecosystem state and ecosystem services explicit, stakeholders will gain greater insight into how reef health affects them. This is an important step in building greater constituency for reef stewardship and management. Further, by estimating the real costs of allowing reef ecosystems to degrade, a compelling case can be made at a governmental level on the threats to food security and opportunities to mitigate costs through improved management. Page 6 of 10 The Component will also help operationalize the use of ecosystem services for marine spatial planning. Existing tools for marine reserve design and modeling flows of services will be tailored to Public Disclosure Copy the specific needs of people and eco-businesses in tropical coastal areas. Tools will allow stakeholders to visualize the production and flows of ecosystem services and therefore evaluate the consequences of different scenarios for development and management. Examples of questions that local stakeholders will be able to pose include: How should eco-businesses be distributed to maximize potential synergies while ensuring that ecosystem function is maintained at sufficiently high levels to sustain enterprise? Which coastal areas are best set aside for conservation purposes? Where might marine reserves have the greatest benefit to fisheries? Who would benefit from an improvement in watershed management? Component II: Using Ecosystem Services valuation to develop new markets and eco-business opportunities and inform development trade-offs (US $2.5 M) (see Annex IV for a detailed description of Component 2) Component II will draw on the results of Component I to build business models that support the health of marine and coastal ecosystem services. Component II will examine how investment in marine and coastal ecosystem services and the strengthening of community livelihoods and resilience to climate variability might be operationalized using eco-business models. Through the development of sustainable alternative enterprises and new income generating opportunities, communities can be empowered to move away from unsustainable coastal resource use practices and towards activities that support improved ecosystem health, increased production outcomes, and greater resilience achieved through livelihood diversification. A central feature of Component II is therefore to bring business thinking to scientists and concurrently, an appreciation of the importance of ecosystem services to business. Component II Public Disclosure Copy will do this by using a modeling approach based on systems science, participatory management principles and value-chain analysis, to develop and evaluate multiple simulated eco-businesses scenarios, and then apply those findings) to the development of on-ground pilot and demonstration sites. The findings gained from Component II will be used to inform GEF and World Bank projects on strategic opportunities for alternative livelihood development and design. Component III: Promoting behavioral change through outreach, decision support and regional learning from results of demonstration pilots (US $0.6 M) (see Annex V for a detailed description of Component 3) Critical to catalyzing behavior change is the expansion of the knowledge base within government and management agencies, the general public and in other key stakeholder communities. Communication and outreach remains one of the critical elements for any campaign to raise awareness and influence behaviors. Component III will develop the frameworks from which to move the science findings into policy and management uptake. Component III will focus on the effective uptake of information generated from Components I and II, through the development and dissemination of the resources. Key objectives will include: (i) Page 7 of 10 catalyzing behavioral change through the effective interpretation of the Project findings into appropriate formats for the various stakeholder audiences and providing mechanisms to ensure the effective uptake of the information into policy and management practices, and (ii) Ensuring the Public Disclosure Copy Project results are incorporated into current GEF and World Bank regional projects and future project design frameworks. An important element in ensuring effective engagement and dissemination of information at the regional, national and l ocal levels will be the establishment of an operational mechanism within each of the targeted regions to improve the level of engagement and building of knowledge and understanding of coral reef resources and their values to communities. Partnerships will be established with project partners and regional networks (e.g. Non-Government Organizations, Coral Triangle Center, PEMSEA and COREMAP III) to preview findings and information and work with the Project to disseminate the results and information resources produced. Centers of Excellence in the Philippines, Australia, and Indonesia will become key coordinating nodes, which will serve as centers for training and capacity building at the country and local levels. These Centers will also play a role in working with the Project Executing Agency in developing knowledge products, information and tools which is country specific and in the dissemination of this information to the stakeholders and audiences to ensure maximum uptake. A Technical Steering Committee will be established to provide technical direction on the project’s activities and research and ensure the linkages and synergies across the project’s components are strengthened. The Committee will oversee the quality of the research and synthesize the results from each component’s projects leading to interpretation of the findings. It will also make policy and management recommendations where appropriate. Component IV: Project Coordination and Management (US $0.4 M) Public Disclosure Copy 29. A partnership arrangement whereby the University of Queensland (UQ), Australia, would serve as recipient of the GEF grant funds on behalf of project beneficiaries, and as Executing Agency, will be entered into with the GEF. This arrangement, in which the University’s Global Change Institute (GCI) would serve as the Project Executing Agency (PEA), has been determined to offer the optimal combination of financial accountability, technical expertise, capacity building and long-term institutional commitment (including substantial co-financing). UQ also served as executing agency under the GEF global Coral Reef Targeted Research & Capacity Building for Management Project, completed in 2010; its performance was rated Highly Satisfactory in the final ICR. IV. Safeguard Policies that might apply Safeguard Policies Triggered by the Project Yes No TBD Environmental Assessment OP/BP 4.01 ✖ Natural Habitats OP/BP 4.04 ✖ Forests OP/BP 4.36 ✖ Pest Management OP 4.09 ✖ Physical Cultural Resources OP/BP 4.11 ✖ Indigenous Peoples OP/BP 4.10 ✖ Page 8 of 10 Involuntary Resettlement OP/BP 4.12 ✖ Safety of Dams OP/BP 4.37 ✖ Public Disclosure Copy Projects on International Waterways OP/BP 7.50 ✖ Projects in Disputed Areas OP/BP 7.60 ✖ V. Financing (in USD Million) Total Project Cost: 6.50 Total Bank Financing: 0.00 Total Cofinancing: Financing Gap: 0.00 Financing Source Amount BORROWER/RECIPIENT 2.00 Global Environment Facility (GEF) 4.50 Total 6.50 VI. Contact point World Bank Contact: Marea Eleni Hatziolos Title: Senior Environmental Specialist Tel: 473-1061 Email: mhatziolos@worldbank.org Borrower/Client/Recipient Name: The University of Queensland Contact: Prof. Alan Lawson Public Disclosure Copy Title: Deputy Vice Chancellor, Research Tel: 61733469942 Email: alan.lawson@uq.edu.au Implementing Agencies Name: The University of Queensland Contact: Prof. Alan Lawson Title: Deputy Vice Chancellor, Research Tel: 61733469942 Email: alan.lawson@uq.edu.au Name: The University of Queensland Contact: Prof. Alan Lawson Title: Deputy Vice Chancellor, Research Tel: 61733469942 Email: alan.lawson@uq.edu.au Name: The University of Queensland Page 9 of 10 Contact: Prof. Alan Lawson Title: Deputy Vice Chancellor Tel: 61733469942 Public Disclosure Copy Email: Name: The University of Queensland Contact: Prof. Alan Lawson Title: Deputy Vice Chancellor, Research Tel: 61733469942 Email: alan.lawson@uq.edu.au VII. For more information contact: The InfoShop The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 458-4500 Fax: (202) 522-1500 Web: http://www.worldbank.org/infoshop Public Disclosure Copy Page 10 of 10